Pandemic risk – a threat or an opportunity for insurance


The ongoing pandemic of the new coronavirus (COVID-19) warns of the growing importance of pandemic risk. The final number of human casualties is still uncertain, while huge adverse effects on the world economy are evident. Many economic sectors have been affected by emergency measures and the pandemic itself. The paper analyzes the impact of the pandemic on the insurance sector, including the increase in liabilities to policyholders with a simultaneous reduction of the insurance premium collected, the deterioration of the macroeconomic environment and operational challenges that insurers face. The aim of this paper is to point out the possible contribution of insurance to pandemic risk management. Following the COVID-19 pandemic, insurers came under pressure to offer affordable insurance against the risk of pandemic, which is significantly different from normally insurable risks, and especially in the part concerning possible losses due to business interruption. Public-private partnership is an adequate risk management model which distributes the burden of repairing the consequences of the pandemic between the state and the (re)insurance sector.